DEEPAK SOGANL, MUMBAI V. DCIT 24(1), MUMBAI

ITA 3163/MUM/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 3376 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 10 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-03-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 09-02-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 05-05-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: B S BIST
• Keywords: Capital asset; Business income; Salary income; Transactions in derivatives
• Section: 143(3); 147; 148

Judgement Text

D IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER ./ I.T.A. NO.3163 /MUM/2014 ( / ASSESSMENT YEAR : 2008-09) DEEPAK SOGANI A-704, BEVERLY PARK-I DLF CITY-2 , NEAR CITY CENTRE MALL, M G ROAD, GURGAON, HARYANA-122022 / V. DCIT-24(1), PRATYAKSHA KAR BHAWAN, BANDRA KURLA COMPLEX, BANDRA(EAST), MUMBAI- 400 050 ./ PAN :AMFPS5138L ( / APPELLANT ) .. ( / RESPONDENT ) ASSESSEE BY : MR. KIRAN MEHTA REVENUE BY : MR. B S BIST, SR. DR / DATE OF HEARING : 09-02-2016 / DATE OF PRONOUNCEMENT : 30-03-2016 / O R D E R PER RAMIT KOCHAR, ACCOUNTANT MEMBER THIS APPEAL, FILED BY THE ASSESSEE, BEING ITA NO. 3 163/MUM/2014, IS DIRECTED AGAINST THE ORDER DATED 28-02-2014 PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)- 34, MUMBAI (H EREINAFTER CALLED THE CIT(A)), THE APPELLATE PROCEEDINGS BEFORE THE CIT( A) AROSE FROM THE ASSESSMENT ORDER DATED 29-11-2011 PASSED BY THE LEA RNED ASSESSING OFFICER (HEREINAFTER CALLED THE AO) U/S. 143(3) OF THE IN COME TAX ACT,1961(HEREINAFTER CALLED THE ACT) READ WITH SE CTION 147 OF THE ACT, FOR THE ASSESSMENT YEAR 2008-09. 2. THE GROUNDS RAISED BY THE ASSESSEE IN THE MEMO O F APPEAL FILED WITH THE TRIBUNAL READ AS UNDER:- ITA 3163/MUM/2014 2 1.IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED CIT(A) ERRED IN NOT HOLDING THAT LOSS OF RS.55,14,312 INCURRED BY THE APPELLANT IN F&O/DERIVATIVES SEGMENT OF STOCK MARKET O UGHT TO HAVE BEEN SET OFF AGAINST SHORT TERM PROFIT OF RS.48,39,634 M ADE BY THE APPELLANT IN SHARES IN CASH MARKET FOR THE YEAR IN A PPEAL OR AGAINST INCOME FROM ANY OTHER SOURCE EARNED BY THE APPELLANT FOR THE YEAR. 2. THE LEARNED CIT(A) GRAVELY ERRED IN NOT SPECIFIC ALLY DEALING WITH THE ABOVE GROUND AND IN NOT PASSING ANY SPEAKING ORDER I N RESPECT OF THE ABOVE GROUND. 3. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW THE LEARNED CIT(A) ERRED IN NOT HOLDING THAT THE ASSESSMENT IN APPE AL MADE U/S 147/148 WAS BAD IN LAW AND WAS NOT TENABLE. THE LEAR NED CIT(A) ALSO ERRED IN NOT HOLDING THAT THE NOTICE ISSUED U/S 148 WA S IN ITSELF BAD IN LAW AS IT WAS ISSUED FOR REASONS THAT WOULD NOT JUSTIFY INITIATION OF REASSESSMENT. 4. THE LEARNED CIT(A) ERRED IN HOLDING THAT GROUND RE LATED LEVY OF INTEREST U/S 234A/234B AND 234C WAS CONSEQUENTIAL IN N ATURE. IT IS SUBMITTED THAT IN THE FACTS AND CIRCUMSTANCES OF THE CA SE AND IN LAW NO INTEREST WAS LEVIABLE U/S 234A/234B AND 234C. 5. WITHOUT PREJUDICE TO THE GROUND NO. 1 THE LEARNED C IT(A) ERRED IN NOT ALLOWING CARRY FORWARD OF LOSS INCURRED IN F & O SE GMENT OF THE STOCK MARKET. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E HAS DECLARED INCOME FROM SALARY , RENTAL INCOME, BUSINESS INCOME FROM T RADING IN FUTURES AND OPTION MARKET , SHORT TERM CAPITAL GAINS AND INCOME FROM OTHER SOURCES. THE ASSESSEE FILED RETURN OF INCOME WITH REVENUE BELATE DLY ON 31-03-2010 AND NOTICE U/S 148 OF THE ACT WAS ISSUED ON 14-03-2011 WHICH WAS DULY SERVED ON THE ASSESSEE, AFTER RECORDING OF REASONS FOR RE- OPENING OF THE ASSESSMENT. 4. THE ASSESSEE HAD RETURNED A LOSS FROM TRADING I N F & O OF RS.55,14,313/- AND SHORT TERM CAPITAL GAINS OF RS. 48,39,634/- IN THE RETURN OF INCOME FILED WITH REVENUE. THIS SHORT TERM CAPIT AL GAINS HAS BEEN SET-OFF BY THE ASSESSEE AGAINST THE BUSINESS LOSS FROM F & O B USINESS. THE ASSESSMENT ITA 3163/MUM/2014 3 WAS RE-OPENED U/S 147 OF THE ACT DUE TO THE AFORE-S AID REASONS IN VIEW OF THE PROVISIONS OF SECTION 70 OF THE ACT, WHICH ARE REPR ODUCED HEREUNDER :- SET OFF, OR CARRY FORWARD AND SET OFF [ SET OFF OF LOSS FROM ONE SOURCE AGAINST INCOME FROM ANOTHER SOURCE UNDER THE SAME HEAD OF INCOME. 70. (1) SAVE AS OTHERWISE PROVIDED IN THIS ACT, WHERE THE NET RESULT FOR ANY ASSESSMENT YEAR IN RESPECT OF ANY SOURCE FALLIN G UNDER ANY HEAD OF INCOME, OTHER THAN 'CAPITAL GAINS', IS A LOSS, THE ASSESSEE SHALL BE ENTITLED TO HAVE THE AMOUNT OF SUCH LOSS SET OFF AG AINST HIS INCOME FROM ANY OTHER SOURCE UNDER THE SAME HEAD. (2) ***** (3) WHERE THE RESULT OF THE COMPUTATION MADE FOR AN Y ASSESSMENT YEAR UNDER SECTIONS 48 TO 55 IN RESPECT OF ANY CAPITAL ASSET (OTHER THAN A SHORT-TERM CAPITAL ASSET) IS A LOSS, THE ASSESSEE S HALL BE ENTITLED TO HAVE THE AMOUNT OF SUCH LOSS SET OFF AGAINST THE INCOME, IF ANY, AS ARRIVED AT UNDER A SIMILAR COMPUTATION 88A MADE FOR THE ASSESSMENT YEAR IN RESPECT OF ANY OTHER CAPITAL ASSET NOT BEING A SHORT-TERM C APITAL ASSET.] THE ASSESSEE WAS ASKED AS TO WHY SET OFF OF F & O L OSS CLAIMED BY THE ASSESSEE AGAINST SHORT TERM CAPITAL GAIN ON SHARES BE NOT DISALLOWED. THE ASSESSEE MADE SUBMISSIONS BEFORE THE AO BUT THE SAM E WERE REJECTED BY THE AO RELYING UPON THE PROVISIONS OF SECTION 70(1),(2) AND (3) OF THE ACT. IT WAS HELD BY THE AO THAT RELIANCE OF THE ASSESSEE ON PRO VISIONS OF SECTION 71(2) OF THE ACT IS MISPLACED. THUS, CLAIM OF THE ASSESSEE F OR ADJUSTMENT OF SHORT TERM CAPITAL GAINS ON SHARES AGAINST LOSS ON F & O TRADI NG BUSINESS AS CLAIMED BY THE ASSESSEE WAS DISALLOWED AND ADDED BACK TO THE I NCOME OF THE ASSESSEE BY THE AO. THE CLAIM OF LOSS FROM F & O BUSINESS WAS A LSO NOT ALLOWED TO BE CARRIED FORWARD AS THE ASSESSEE HAS NOT FILED THE R ETURN OF INCOME WITH THE REVENUE WITHIN PRESCRIBED DUE DATE. FURTHER , IN VI EW OF PROVISIONS OF SECTION 71(2A) OF THE ACT, SET OFF OF LOSS ON FUTURES AND O PTIONS BUSINESS WAS ALSO NOT ALLOWED TO BE SET-OFF AGAINST SALARY INCOME OF THE ASSESSEE. THE AO PASSED RE- ASSESSMENT ORDER DATED 29-11-2011 U/S 143(3) READ W ITH SECTION 147 OF THE ACT DISALLOWING THE AFORE-STATED CLAIMS OF THE ASSE SSEE. ITA 3163/MUM/2014 4 5. AGGRIEVED BY THE RE-ASSESSMENT ORDER DATED 29-11 -2011 U/S 143(3) READ WITH SECTION 147 OF THE ACT PASSED BY THE AO, THE A SSESSEE FILED FIRST APPEAL BEFORE THE CIT(A). 6. THE ASSESSEE SUBMITTED THAT IN VIEW OF PROVISION S OF SECTION 71(2) OF THE ACT , THE CLAIM OF THE ASSESSEE FOR SET OFF OF SHOR T TERM CAPITAL GAINS ON SHARES EARNED BY THE ASSESSEE AGAINST THE LOSS INCURRED IN THE FUTURE AND OPTION DERIVATIVE TRADING BUSINESS OF THE ASSESSEE IS TO B E ALLOWED. THE ASSESSEE SUBMITTED THAT IN VIEW OF PROVISIONS OF SECTION 43( 5)(D) OF THE ACT , FUTURE AND OPTION DERIVATIVE TRADING LOSS IS A NON-SPECULATIVE BUSINESS LOSS ASSESSABLE UNDER THE HEAD PROFIT AND GAINS OF BUSINESS OR PR OFESSION . THUS, THE ASSESSEE SUBMITTED THAT AS PER PROVISIONS OF SECTIO N 71(2) OF THE ACT , THE ASSESSEE CLAIM FOR SET OFF F&O DERIVATIVE TRADING B USINESS LOSS BE ALLOWED TO BE SET OFF AGAINST THE SHORT TERM CAPITAL GAINS ON SHARES EARNED BY THE ASSESSEE. THE SAID CLAIM WAS ALSO REJECTED BY THE C IT(A) NOR THE CLAIM FOR F& O TRADING LOSS WAS ALLOWED TO BE CARRIED FORWARD AS THE ASSESSEE FILED RETURN OF INCOME LATE BEYOND THE TIME STIPULATED U/S 139(1 ) OF THE ACT. SIMILARLY, THE CLAIM OF ADJUSTMENT OF F& O TRADING LOSS WAS NOT AL LOWED TO BE SET OFF BY THE CIT(A) AGAINST SALARY INCOME IN VIEW OF BAR AND PRO HIBITION CREATED BY SECTION 71(2A) OF THE ACT. THE CIT(A) PASSED APPELLATE ORDE RS DATED 28-02-2014 REJECTING AFORE-STATED CLAIMS OF THE ASSESSEE. 7. AGGRIEVED BY THE APPELLATE ORDERS DATED 28-02-20 14 PASSED BY THE CIT(A), THE ASSESSEE FILED SECOND APPEAL WITH THE TRIBUNAL. 8. THE LD COUNSEL FOR THE ASSESSEE CONTENDED BEFORE THE TRIBUNAL THAT THE ASSESSEE INCURRED DERIVATIVE TRADING BUSINESS LOSS IN FUTURES AND OPTIONS OF RS.55,14,313/- WHICH WAS SOUGHT TO BE SET-OFF AGAIN ST SHORT TERM CAPITAL GAINS OF RS.48,39,634/- EARNED BY THE ASSESSEE ON S HARES WHICH IS AN ALLOWABLE CLAIM IN VIEW OF PROVISIONS OF SECTION 71 (2) OF THE ACT AND THE ITA 3163/MUM/2014 5 AUTHORITIES BELOW ERRED IN NOT ALLOWING THE SAID CL AIM OF THE ASSESSEE FOR SET- OFF. THE LD. COUNSEL SUBMITTED THAT THE REVENUE ERR ED IN INVOKING PROVISIONS OF SECTION 70 OF THE ACT WHICH IS NOT APPLICABLE AS TH E SAME IS APPLICABLE FOR ADJUSTMENT OF LOSSES WITHIN SAME HEAD OF INCOME , R ATHER PROVISIONS OF SECTION 71 OF THE ACT ARE APPLICABLE IN THE CASES O F ADJUSTMENT OF LOSSES UNDER DIFFERENT HEAD OF THE INCOME INTER-SE AND THE CLAI M OF THE ASSESSEE IS ALLOWABLE IN VIEW OF SPECIFIC PROVISIONS AS CONTAIN ED IN SECTION 71(2) OF THE ACT. THE LD COUNSEL SUBMITTED THAT ON PERUSAL OF CO MPUTATION OF INCOME FILED BY THE ASSESSEE WITH THE REVENUE ALONG WITH RETURN OF INCOME, LOSS ARISING FROM F & O DERIVATIVE TRADING BUSINESS CANNOT BE SE T OFF AGAINST SALARY INCOME IN VIEW OF THE BAR AND PROHIBITION CREATED B Y PROVISIONS OF SECTION 71(2A) OF THE ACT , WHILE REST OF THE INCOME DECLAR ED BY THE ASSESSEE IN RETURN OF INCOME FILED WITH REVENUE IS TO BE ADJUSTED AGAI NST F&O DERIVATIVE TRADING BUSINESS LOSS INCURRED BY THE ASSESSEE. THE ASSESSE E COUNSEL SUBMITTED THAT IN VIEW OF PROVISIONS OF SECTION 43(5)(D) OF THE AC T , THE F & O DERIVATIVE TRADING BUSINESS LOSS INCURRED BY THE ASSESSEE IS A NON-SPECULATIVE BUSINESS LOSS WHICH IS CHARGEABLE TO TAX UNDER THE HEAD PRO FIT AND GAINS OF BUSINESS OR PROFESSION AS NON-SPECULATIVE BUSINESS INCOME (LOS S) AND CAN BE SET OFF AGAINST INCOME EARNED UNDER THE OTHER HEADS OF INCO ME EXCEPT SALARY INCOME. 9. LD. DR ON THE OTHER HAND RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 10. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND PE RUSED THE MATERIAL ON RECORDS. WE HAVE OBSERVED THAT THE ASSESSEE HAS INC URRED LOSS OF RS.55,14,313/- IN FUTURES AND OPTIONS DERIVATIVE TR ADING BUSINESS. IN VIEW OF THE PROVISIONS OF SECTION 43(5)(D) OF THE ACT, THE SAID LOSS IS A NON-SPECULATIVE BUSINESS LOSS PROVIDED CONDITIONS STIPULATED U/S. 4 3(5) OF THE ACT ARE FULFILLED WHICH IS NOT IN DISPUTE IN PRESENT APPEALS AS PER T HE FACTS EMANATING FROM RECORDS. THE DISPUTE IS WITH RESPECT TO ADJUSTING T HE SAID NON-SPECULATIVE BUSINESS LOSS OF RS.55,14,313/- INCURRED ON F & O D ERIVATIVE TRADING ITA 3163/MUM/2014 6 BUSINESS AGAINST THE SHORT TERM CAPITAL GAINS ON SA LE OF SHARES OF RS.48,39,634/- EARNED BY THE ASSESSEE . WE HAVE OBS ERVED THAT THE SAID SET- OFF IS DENIED TO THE ASSESSEE IN VIEW OF SECTION 70 (1), (2) AND (3) OF THE ACT WHILE THE ASSESSEE IS RELYING ON SECTION 71(2) OF T HE ACT. WE HAVE CAREFULLY ANALYZED THE PROVISIONS OF SAID SECTIONS WHICH ARE REPRODUCED HEREUNDER: SET OFF, OR CARRY FORWARD AND SET OFF [ SET OFF OF LOSS FROM ONE SOURCE AGAINST INCOME FROM ANOTHER SOURCE UNDER THE SAME HEAD OF INCOME. 70. (1) SAVE AS OTHERWISE PROVIDED IN THIS ACT, WHERE THE NET RESULT FOR ANY ASSESSMENT YEAR IN RESPECT OF ANY SOURCE FALLING UN DER ANY HEAD OF INCOME, OTHER THAN 'CAPITAL GAINS', IS A LOSS, THE ASSESSEE SHALL BE ENTITLED TO HAVE THE AMOUNT OF SUCH LOSS SET OFF AGAINST HIS INCOME FROM ANY OTHER SOURCE UNDER THE SAME HEAD. (2) WHERE THE RESULT OF THE COMPUTATION MADE FOR AN Y ASSESSMENT YEAR UNDER SECTIONS 48 TO 55 IN RESPECT OF ANY SHORT-TERM CAPITAL ASSET IS A LO SS, THE ASSESSEE SHALL BE ENTITLED TO HAVE THE AMOUNT OF SU CH LOSS SET OFF AGAINST THE INCOME, IF ANY, AS ARRIVED AT UNDER A SIMILAR COMPU TATION MADE FOR THE ASSESSMENT YEAR IN RESPECT OF ANY OTHER CAPITAL ASS ET. (3) WHERE THE RESULT OF THE COMPUTATION MADE FOR AN Y ASSESSMENT YEAR UNDER SECTIONS 48 TO 55 IN RESPECT OF ANY CAPITAL ASSET (OTHER THAN A SHOR T-TERM CAPITAL ASSET) IS A LOSS, THE ASSESSEE SHALL BE ENT ITLED TO HAVE THE AMOUNT OF SUCH LOSS SET OFF AGAINST THE INCOME, IF ANY, AS AR RIVED AT UNDER A SIMILAR COMPUTATION MADE FOR THE ASSESSMENT YEAR IN RESPECT OF ANY OTHER CAPITAL ASSET NOT BEING A SHORT-TERM CAPITAL ASSET.] ITA 3163/MUM/2014 7 [ SET OFF OF LOSS FROM ONE HEAD AGAINST INCOME FROM AN OTHER. 71. (1) WHERE IN RESPECT OF ANY ASSESSMENT YEAR THE NE T RESULT OF THE COMPUTA- TION UNDER ANY HEAD OF INCOME, OTHER THAN 'CAPITAL GAINS', IS A LOSS AND THE ASSESSEE HAS NO INCOME UNDER THE HEAD 'CAPITAL GAIN S', HE SHALL, SUBJECT TO THE PROVISIONS OF THIS CHAPTER, BE ENTITLED TO 91 HAVE THE AMOUNT OF SUCH LOSS SET OFF AGAINST HIS INCOME, IF ANY, ASSESSABLE FOR THAT ASS ESSMENT YEAR UNDER ANY OTHER HEAD. (2) WHERE IN RESPECT OF ANY ASSESSMENT YEAR, THE NE T RESULT OF THE COMPUTATION UNDER ANY HEAD OF INCOME, OTHER THAN 'CAPITAL GAINS ', IS A LOSS AND THE ASSESSEE HAS INCOME ASSESSABLE UNDER THE HEAD 'CAPI TAL GAINS', SUCH LOSS MAY, SUBJECT TO THE PROVISIONS OF THIS CHAPTER, BE SET OFF AGAINST HIS INCOME, IF ANY, ASSESSABLE FOR THAT ASSESSMENT YEAR UNDER ANY HEAD OF INCOME INCLUDING THE HEAD 'CAPITAL GAINS' (WHETHER RELATING TO SHORT -TERM CAPITAL ASSETS OR ANY OTHER CAPITAL ASSETS). [(2A) NOTWITHSTANDING ANYTHING CONTAINED IN SUB-SE CTION (1) OR SUB-SECTION (2), WHERE IN RESPECT OF ANY ASSESSMENT YEAR, THE NET RE SULT OF THE COMPUTATION UNDER THE HEAD 'PROFITS AND GAINS OF BUSINESS OR PR OFESSION' IS A LOSS AND THE ASSESSEE HAS INCOME ASSESSABLE UNDER THE HEAD 'SALA RIES', THE ASSESSEE SHALL NOT BE ENTITLED TO HAVE SUCH LOSS SET OFF AGAINST S UCH INCOME.] (3) WHERE IN RESPECT OF ANY ASSESSMENT YEAR, THE NE T RESULT OF THE COMPUTATION UNDER THE HEAD 'CAPITAL GAINS' IS A LOSS AND THE AS SESSEE HAS INCOME ASSESSABLE UNDER ANY OTHER HEAD OF INCOME, THE ASSE SSEE SHALL NOT BE ENTITLED TO HAVE SUCH LOSS SET OFF AGAINST INCOME UNDER THE OTHER HEAD.] ITA 3163/MUM/2014 8 [(4) WHERE THE NET RESULT OF THE COMPUTATION UNDER THE HEAD 'INCOME FROM HOUSE PROPERTY' IS A LOSS, IN RESPECT OF THE ASSESS MENT YEARS COMMENCING ON THE 1ST DAY OF APRIL, 1995 AND THE 1ST DAY OF APRIL , 1996, SUCH LOSS SHALL BE FIRST SET OFF UNDER SUB-SECTIONS (1) AND (2) AND TH EREAFTER THE LOSS REFERRED TO IN SECTION 71A SHALL BE SET OFF IN THE RELEVANT ASSESSMENT YEAR I N ACCORDANCE WITH THE PROVISIONS OF THATSECTION.] ON CAREFUL PERUSAL OF SECTION 70 AND 71 OF THE ACT , IT IS OBSERVED THAT THE SAID SECTION 70 OF THE ACT DEALS WITH SET-OFF OF LO SSES UNDER THE SAME HEAD OF INCOME WHILE IN THE INSTANT CASE LOSSES INCURRED BY THE ASSESSEE ON F&O DERIVATIVE TRADING IS A BUSINESS LOSS FROM NON-SPEC ULATIVE BUSINESS WHICH IS NOT IN DISPUTE IN VIEW OF PROVISIONS OF SECTION 43( 5)(D) OF THE ACT AND THE ASSESSEE IN VIEW OF PROVISIONS OF SECTION 71(2) OF THE ACT IS SEEKING THE SET OFF THE SAID NON-SPECULATIVE BUSINESS LOSS ON F&O DERIV ATIVE TRADING BUSINESS AGAINST OTHER HEADS OF INCOME BEING THE INCOME FROM SHORT TERM CAPITAL GAINS EARNED ON THE SALE OF SHARES AND OTHER INCOME EARNE D BY THE ASSESSEE EXCLUDING SALARY INCOME EARNED BY THE ASSESSEE IN V IEW OF PROVISIONS OF SECTION 71(2A) OF THE ACT. ON PERUSAL OF THE SECTIO N 71 OF THE ACT , IT IS OBSERVED THAT IT DEALS WITH SET-OFF OF LOSSES INCU RRED UNDER ONE HEAD OF INCOME AGAINST ANOTHER HEAD OF INCOME. THE LANGUAGE OF SECTION 71(2) OF THE ACT IS PLAIN AND CLEAR AND IT ALLOWS THE LOSSES INC URRED UNDER ANY HEAD OTHER THAN UNDER THE HEAD CAPITAL GAINS TO BE SET OFF A GAINST INCOME UNDER ANY OTHER HEAD OF INCOME INCLUDING HEAD CAPITAL GAINS . THE LANGUAGE IS CLEAR AND PLAIN AND WE DO NOT SEE ANY BAR OR PROHIBITION ON A DJUSTMENT OF LOSSES INCURRED BY THE ASSESSEE IN F & O TRADING BUSINESS AGAINST THE SHORT TERM CAPITAL GAINS EARNED BY THE ASSESSEE ON SALE OF SHA RES AND OTHER INCOME EARNED BY THE ASSESSEE EXCEPT SALARY INCOME AS THER E IS A SPECIFIC BAR AND PROHIBITION RAISED BY THE STATUTE BY VIRTUE OF SECT ION 71(2A) OF THE ACT WHICH DEBAR ADJUSTMENT OF LOSSES INCURRED UNDER THE HEAD PROFITS AND GAINS OF BUSINESS OR PROFESSION TO BE SET OFF AGAINST SALAR Y INCOME. SECTION 71(2A) HAS ITA 3163/MUM/2014 9 A NON-OBSTANTE CLAUSE AND CREATES A BAR NOTWITHSTAN DING WHAT IS CONTAINED IN SECTION 71(1) AND 71(2) OF THE ACT. THE ASSESSEE HA S INCURRED LOSSES IN F & O TRADING IN DERIVATIVES WHICH IS ASSESSABLE AS NON-S PECULATIVE BUSINESS LOSS UNDER THE HEAD PROFIT AND GAINS OF BUSINESS OR PRO FESSION AND BAR AS CONTAINED IN SECTION 71(2A) OF THE ACT SHALL OPERAT E AND THE ASSESSEE WILL NOT BE ENTITLED TO SET OFF LOSSES IN F & O DERIVATIVE T RADING BUSINESS AGAINST SALARY INCOME EARNED BY THE ASSESSEE , WHILE ASSESSEE WILL BE ENTITLED TO SET-OFF SUCH LOSSES IN F & O DERIVATIVE TRADING BUSINESS LOSSES WHICH ARE NON-SPECULATIVE BUSINESS LOSSES AGAINST CAPITAL GAINS ON SALE OF SH ARES AND OTHER INCOME EARNED BY THE ASSESSEE EXCEPT SALARY INCOME. WE ORD ER ACCORDINGLY. THE NEXT CONTENTION OF THE ASSESSEE IS THAT THE ASS ESSEE HAS FILED RETURN OF INCOME WITH REVENUE BELATEDLY ON 31-03-2010 WHICH I S BEYOND THE TIME STIPULATED U/S 139(1) OF THE ACT, WHILE THE ASSESSE E WAS REQUIRED TO FILE THE SAME BY 30-09-2008 I.E. THE DUE DATE STIPULATED U/S 139(1) OF THE ACT. THUS, THE ASSESSEE DID NOT FILE RETURN OF INCOME WITH REV ENUE WITH-IN DUE DATE STIPULATED U/S 139(1) OF THE ACT , RATHER THE RETUR N WAS FILED BELATEDLY U/S 139(4) OF THE ACT. PROVISIONS OF SECTION 139(3) OF THE ACT READ WITH SECTION 80 OF THE ACT ,POST AMENDMENT BY THE DIRECT TAX LAWS ( AMENDMENT) ACT ,1987 W.E.F. 01-04-1989, CLEARLY STIPULATE THAT FOR LOSSE S SUSTAINED BY THE TAX-PAYER UNDER THE HEAD PROFIT AND GAINS OF BUSINESS OR PRO FESSION OR CAPITAL GAINS WHEREBY THE TAX-PAYER CLAIMS TO TAKE BENEFIT OF CAR RY FORWARD OF SUCH LOSSES U/S 72(1),73(2) , 74(1),74(3) OR 74A(3) OF THE ACT , THE TAX-PAYER HAS TO FILE RETURN OF INCOME AS PER PROVISIONS OF SECTION 139(1 ) OF THE ACT WITHIN DUE DATE SPECIFIED IN SECTION 139(1) OF THE ACT AND ANY NON- COMPLIANCE WILL DISENTITLE CARRY FORWARD OF SUCH LOSSES BY VIRTUE OF SECTION 1 39(3) READ WITH SECTION 80 OF THE ACT. THE RECOURSE IN SUCH A CASE IS TO APPRO ACH CBDT U/S 119 OF THE ACT FOR ALLOWABILITY OF CARRY FORWARD OF SUCH LOSSE S WHICH ARE CLAIMED VIDE BELATED RETURN OF INCOME FILED WITH REVENUE. ADMITT EDLY, THE ASSESSEE IN THE INSTANT CASE DID NOT FILE RETURN OF INCOME WITHIN D UE DATE AS PRESCRIBED U/S ITA 3163/MUM/2014 10 139(1) OF THE ACT AND HENCE , THE ASSESSEE WILL NOT BE ALLOWED TO CARRY FORWARD UN-ADJUSTED BUSINESS LOSS ARISING FROM F & O DERIVA TIVE TRADING BUSINESS CHARGEABLE TO TAX UNDER THE HEAD PROFIT AND GAIN O F BUSINESS OR PROFESSION WHICH REMAINED UN-ADJUSTED AFTER ADJUSTING THE SAME UNDER THE OTHER HEADS OF INCOME EXCEPT SALARY INCOME , AS PER OUR DECISIO N IN PRECEDING PARAS. WE ORDER ACCORDINGLY. WITH THIS ORDER WE HAVE DISPOSED OF GROUND NO 1 , 2 AND 5 RAISED BY THE ASSESSEE. WE ORDER ACCORDINGLY. 11. THE LD COUNSEL OF THE ASSESSEE HAS NOT PRESSED GROUND NO. 3 AND HENCE THE SAME IS DISMISSED. 12. GROUND NO 4 RAISED BY THE ASSESSEE IS CONSEQUEN TIAL AND DOES NOT REQUIRE ADJUDICATION AND IS DISMISSED. 13. IN THE RESULT, THE APPEAL FILED BY THE ASSESSE E IN ITA N0. 3163/MUM/2014 FOR THE ASSESSMENT YEAR 2008-09 IS PA RTLY ALLOWED AS INDICATED ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH MARCH, 2016. # $% &' SD/- SD/- (AMIT SHUKLA) (RAMIT KOCHAR) JUDICIAL MEMBER ACCOUNTANT MEMBER $ MUMBAI ; & DATED 30-03-2016 [ .9../ R.K. R.K. R.K. R.K. , EX. SR. PS ITA 3163/MUM/2014 11 !'#$%&%# / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. : ( ) / THE CIT(A)- CONCERNED, MUMBAI 4. : / CIT- CONCERNED, MUMBAI 5. => 99?@ , ?@ , $ / DR, ITAT, MUMBAI F BENCH 6. BC D / GUARD FILE. / BY ORDER, = 9 //TRUE COPY// / ( DY./ASSTT. REGISTRAR) , $ / ITAT, MUMBAI